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Info Service on Climate Change (Oct21/01) Delhi, 11 October (Indrajit Bose)- Reaccreditation of the Development Bank of Southern Africa (DBSA) to the Green Climate Fund (GCF) proved highly contentious at the 30th meeting of its Board, held virtually from 4-7 October. The contention arose when Board member Lars Roth (Sweden) imposed new conditions on the DBSA that included a net-zero emissions target no later than 2050 for its reaccreditation. The net-zero condition drew strong opposition from developing country Board members who questioned its basis and pointed out that the Paris Agreement did not prescribe net-zero as a target for individual countries. Developing country Board members also pointed out that these new conditions were being imposed in a non-transparent manner without their knowledge. This led to intense discussions on the substance and process regarding the conditions for DBSA’s reaccreditation. Roth
(Sweden) imposed the following conditions: 2. DBSA shall include written progress report to demonstrate steps the applicant has taken to shift its overall investment and loan portfolio away from carbon intensive activities, notably those associated with fossil fuels, into its annual self-assessment and mid-term reports required by the GCF Monitoring and Accountability Framework. The progress report shall include a detailed overview of the applicant’s fossil fuel-related investments in percentage share as well as in absolute terms, both in relation to the applicant’s overall investment and loan portfolio and in relation to new investment and loans made in the year prior to the progress report.” These conditions were not part of the document released by the Secretariat and it seemed that the conditions were added following consultations which did not include developing country Board members. Developing country Board members from South Africa, Saudi Arabia, Egypt, China, Tanzania, Liberia, Senegal and Korea strongly objected to the conditions imposed. They referred to the conditions as inequitable and unfair for a developing country entity and urged the Board to reaccredit DBSA without the conditions. They also wanted to know how the conditions were added to the draft decision, and said that they could not understand how an agenda item which had not been opened and discussed in the Board could be presented with conditions for adoption of decision. On the process, however, Co-Chair Jean-Christophe Donnellier (France) said there was no issue about transparency and that it was merely a matter of “late arrival of text”. Tlou Ramaru (South Africa) said that the Board needs to be careful in so far as not to impose onerous conditions on direct access entities. Ramaru also raised a procedural issue in relation to the conditions since they were already part of the draft decision proposed. He also wanted to know who prepared these conditions and if they had been introduced behind the scenes. Ayman Shasly (Saudi Arabia) said that he was flabbergasted with the process as well as the substance of the conditions. He asked if consultations were happening backdoor unknown to developing country members, adding that there was a lack of transparency. On the substance of the conditions, Shasly said the language was inconsistent with the Paris Agreement and said that they were unacceptable. He added that this matter would be brought up at the 26th meeting of the UNFCCC’s Conference of Parties (COP 26, scheduled to be held in Glasgow from Oct 31), as to how developing country institutions are being blackmailed for them to be do business with the GCF. Shasly said further that the Fund is being manipulated by some developed country members who were pushing their own agenda, and that was not consistent with the principles of equity, and common but differentiated responsibilities and Article 4.1 of the Paris Agreement. Shasly pointed to the poverty in Africa and stressed how inequitable this is to ask a developing country institution to go net-zero. (Article 4.1 states – “In order to achieve the long-term temperature goal set out in Article 2, Parties aim to reach global peaking of greenhouse gas emissions as soon as possible, recognizing that peaking will take longer for developing country Parties, and to undertake rapid reductions thereafter in accordance with best available science, so as to achieve a balance between anthropogenic emissions by sources and removals by sinks of greenhouse gases in the second half of this century, on the basis of equity, and in the context of sustainable development and efforts to eradicate poverty.”) Wael Aboulmagd (Egypt) asked what policies were the basis of the conditions. He pointed out that net-zero in the Paris Agreement is a global aspiration and not a prescription for individual countries. “We all want to show more ambition, but to coerce an entity to accept a condition would be very dangerous,” he stressed further. He registered his difficulty in accepting the conditions and said that there is a differentiated approach when it comes to aspirations in emissions reduction between developed and developing countries. He also said that such conditions sabotage the predictability that all partners are entitled to and since entities want to bring funding proposals to the Fund, they will feel compelled to agree to any type of conditions. Richard Muyungi (Tanzania) said if there were issues with the entity, the Secretariat and the Accreditation Panel would have brought them up and it did not make sense to impose additional conditions on DBSA. “The accredited entities are in a dilemma. They want to go ahead and that is why they accept the conditions. But it is the Board that has the mandate. We should remove the conditions,” said Muyungi. Ren Yan (China) echoed other developing countries and said that accreditation and reaccreditation should follow Board procedures and that unreasonable conditions should not be added. “We should be aligned with the goals of UNFCCC, especially common but differentiated responsibilities. We should not force developing country entities to achieve certain targets. There is no one size fits all approach for fossil fuels,” said Yan. Jeremiah Sokan (Liberia) and Cheikh Sylla (Senegal) also supported removing the conditions. Chong Hwa Lee (Korea) made a plea for developed countries to understand the realities in developing countries. He expressed how difficult it is for developing countries to access financial resources and the challenges of transitioning into cleaner energy options. “Developing countries are struggling to reduce coal. Natural gas is cleaner than coal, but it is still too expensive for developing countries. It is energy that people live on, so it is a matter of life and death. (I am) asking developed countries to have a more generous perspective for developing countries,” he said. He also added that had DBSA belonged to a developed country, a much stronger condition should have been imposed, but the “DBSA belongs to a developing country and these kinds of institutions are at the stage of growing and learning and becoming cleaner” and that “more opportunity must be given to them”. He reiterated that the conditions should be removed. Following further consultations in a small group, the Secretariat reiterated that the original document on DBSA circulated to the Board did not contain any conditions and that there was no consensus on the conditions in the small group. The Secretariat proposed an option for the Board to consider extending the validity of DBSA’s accreditation master agreement (AMA) for three months since DBSA’s agreement is close to lapsing. Reflecting on the situation, Shasly said, that it should be lesson learnt and this is what happens when something is cooked behind the scenes. “If we had a clean decision and a Board member would want to impose conditions, we would have considered it and exercised different options such as voting. But the way it was done, it has become our job to lift the conditions and that should not be the case,” he added further. Roth (Sweden) lamented on the lack of time to discuss substance and the time spent to discuss procedures in Board meetings. He said that Sweden wants the entity reaccredited and the entity agrees with the conditions so all this discussion is “nonsense”. Since there was no time for further discussions to resolve the matter, the issue is expected to be taken up in consultations between Board meetings. The Board did reaccredit three other entities at the meeting. The entities are: Environment Investment Fund based in Namibia, the International Union for Conservation of Nature (IUCN), based in Switzerland and the United Nations Development Programme (UNDP), based in the United States of America. Besides accreditation matters, the Board approved USD 1.2 billion for 13 projects in developing countries. (A further article will follow).
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